How Do I Offer Health Insurance to My Employees?

Providing healthcare attracts new workers and is a retention tool for your current staff. Here’s how to best provide health insurance as an employer.

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Your guide to employer-sponsored health insurance — including information on ACA options, tax benefits, and third-party providers

Many small and medium-sized businesses plan to start healthcare benefits to staffers in the near future. Whether it’s in response to market conditions or a sign that the company is thriving, medical benefits are a smart recruitment and retention tool. Healthcare coverage is the number one factor for job seekers when choosing an employer, after salary, Robert Half reports. Businesses are responsive: 56% of small companies and 99% of large ones offer some form of health benefit to at least a portion of their workers.

For many businesses, the cost of healthcare coverage has seemed prohibitive: for others, administering the benefit is daunting. Others have factored in both reasons into their resistance to offer medical benefits. But market conditions and best practices are impelling them forward. There are (relatively) painless ways to get coverage for staff members (and yourself) that employers can leverage.

Healthcare coverage is the number one factor for job seekers when choosing an employer, after salary.

ACA coverage options 

There are several options for businesses that have grown to a size that requires coverage as provided under the Affordable Care Act, or those growing. Other businesses provide coverage even if the mandate doesn’t apply. If you have a requirement to provide coverage, don’t wait for open enrollment season. You can look for options and enroll at any time of the year.

The SHOP Marketplace lets business owners compare plans and pricing, and make a selection from providers in their area.

SMBs with 100 or less employees, and even sole proprietorships, can find help from the federal government at Healthcare.gov. The site provides a learning portal and access to The Small Business Health Options Program (SHOP) Marketplace. The SHOP Marketplace lets business owners compare plans and pricing, and make a selection from providers in their area. It also helps business owners make premium payments and manage employee participation and enrollment.

There are options for single (employee only) coverage, family coverage, and extras like dental insurance. Businesses choose their open enrollment period and cutoff for the initial rollout, and create a waiting period for new employees to join the plan down the road. SMBs mandated under the ACA to provide coverage must do so for full-time or full-time equivalent workers. Family members are not mandated for coverage under the ACA.

If you already have an insurance broker or agent you trust, they can help you in the SHOP marketplace if they’re registered. Don’t have an agent? The Marketplace has registered brokers available to help. These professionals collect zero fees from businesses or employees. You can search for someone local just by providing your zip code.

Tax credits for SMBs through SHOP

SMBs that provide coverage to their workers under a SHOP plan may be eligible for tax credits, up to half of employer-paid premium costs, if they purchase through these exchanges. To qualify, the business must have less than 25 full-time equivalent (FTE) employees, whose average salary is no more than $50,000 per year. Employers will need to pay half the employee’s premium cost to receive a 50% credit against your tax burden. Considering the 25% remaining payments are also a tax deductible business expense, there ultimately could be little cost to the employer to provide coverage.

Third-party providers: even more assistance

Many SMBs turn to third-party providers to outsource services: payroll, human resources, accounting, etc. These professionals know the ins and outs of the field and are ready to step in to help whenever needed, giving you time to get on with business.

Providing, administering, and enrolling employees in healthcare coverage (with annual re-enrollment requirements) can be an overwhelming task. A smart business practice is to outsource this work to the pros. They:

  • Know how to get the right coverage for you and your workers
  • Know how to help enroll staffers
  • Are ready to answer any questions about coverage you or your employees may have

Help with rollout and beyond

When it comes to benefits administration, third-party providers are the answer to a SMBs healthcare prayer. From the administrative perspective alone, they are a worthwhile option. Third-party providers not only manage the rollout of a new plan, they assure everyone’s paperwork is completed — typically online – while business owners have limited to no responsibility in the process.

Third-party providers create systems to assure future hires are enrolled in a timely fashion, triggering enrollment eligibility and dates to have choices made and paperwork received. They manage enrollment changes whenever there is a qualifying event for an employee — birth, death, marriage, or divorce — to assure everything is in order. Finally, they manage annual open enrollment: the bane of every company.

Third-party providers not only manage the rollout of a new plan, they assure everyone’s paperwork is completed — typically online – while business owners have limited to no responsibility in the process.

When it comes to benefits support, third-party providers are available (often 24/7) to answer employee questions from enrollment on. They can help staffers determine which level of coverage or option is best for themselves and their family when they initially enroll, or when they’re looking to make a change.

If there are questions about coverage, staff members know there is a knowledgeable representative available to respond to needs. SMBs do not have to become benefits experts or administrators if they choose a third-party provider to manage the process.

Navigating a group benefits strategy can be inefficient, confusing, expensive, and outdated. Zenefits simplifies benefits for small businesses by creating an easy-to-use, transparent, affordable, and modern experience. On the Zenefits platform, admins can gather all the right benefits information they need in an intuitive way that eliminates manual work. Leaders can also have transparency around pricing and identify the true cost of benefits. The platform allows small businesses to administer, manage, and utilize their benefits with the support of a Certified Partner, and rely on Zenefits from quote to enrollment.

Many platforms allow companies to bring their existing plan into the system for administration: others offer brokers to help SMBs get started. You’ll find options in everything from basic medical coverage to additional benefits — like dental, vision, 401(k), and more — at coverage and price points that fit your and your employee’s needs.

Mobile-friendly

Many third-party providers offer mobile access for everything from enrollment to benefits management. Employees can access information on plan options available, which makes it easier for them to consult with family members when making elections. They provide access to plan data to help employees get answers to their questions quickly. Staffers can even view claims and their status through their smartphones.

Tax benefits for providing coverage 

In addition to tax credits for all legitimate business expenses (and employer portions of healthcare costs are included), providing coverage lowers your and your employee’s tax burden. Qualified benefits are not subject to:

  • Federal Insurance Contributions Act tax (FICA)
  • Federal Unemployment Tax Act (FUTA)
  • Medicare tax
  • Income tax withholding

The cost of healthcare reduces the employee’s base wages: reducing taxes paid by the worker and the business.

SMBs looking to start providing benefits for their staff members may consider polling staffers as a first step. Workers may have champagne dreams and want the best coverage available, so reality checks might be in order. Consider polling staff on what they would like, then look to the market for pricing information on their wish list. As you work with staffers, you’re likely to come up with an affordable plan that meets the majority of their needs, as well as the business’s.

Healthcare is a top priority for workers, and your employees will thank you for offering it to them. Whether you’re planning to offer it as a retention tool for current staff, or a means to attract new workers, there are a wealth of options and professionals available to help.

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